GST on real estate
Full availability of input tax credit and elimination of multiple indirect taxes will step-up sentiment in the real estate sector. Industry experts said benefits of input tax credit on raw materials will negate the impact of putting cement in the highest tax slab of 28 per cent.
The government has fixed 12 per cent for work contract while cement has been put in 28 per cent tax slab from earlier 23-24 per cent in the current tax regime.
Cement prices are likely to go up in near future due to high tax but input tax credit to builders on raw materials such as steel and cement will prevent any rise in realty prices, experts said.
Chartered Accountant Kirti Joshi said, “Considering the full availability of input credit as compared to current regime is expected to be beneficial for reducing project costs under the GST system.”
Joshi said, “Under GST regime entire input credit is allowed to the real estate sector. This should incentivise the people to come within the tax net.”
Though builders said a lot of clarity is still awaited in the sector for deciding the upcoming projects.
A confederation of real estate developers of India (CREDAI) Indore chapter member said, “It is too early to comment much on the sector because we are still awaiting some more clarifications and the mode to avail the benefit of tax credit.”